Philanthropy

If one reads some mailings from our field, from some of our grantees, and from all too many wealth advisors, one might think that philanthropy was and is a byproduct of the U.S. tax system. It wasn’t and isn’t.

It is not even an American invention, as any scholar of religion or ancient history or anthropology can attest. There is no known society that hasn’t had some form of philanthropy or voluntarism and, for hundreds of years, much of this has been done in structured ways.

But it is true that in America there has been a long-time fascination with the giving history, practices, ethics and lifestyles of the very wealthy. Their names and the recipients of their largesse with which their names are associated are the stories of legend and fascination. The quirks and foibles and philanthropic aspirations of the Astors or Carnegies or Rockefellers or Fricks or Rosenwalds — or more recently of the Gateses or Buffets or Helmsleys or Adelsons or Kochs or Schwartzmans or Bloombergs or the Chen Zuckerbergs captivate the attention of many of the remaining 99.5% of society.

If one isn’t careful, one may think that these stories are the story of philanthropy in America. But they aren’t. Or to put it more accurately, they are not the most important stories in American philanthropy.

After all, there have always been superrich — royalty, aristocracy, nobility, landed gentry — who controlled resources and people’s lives. One can cross the ponds on either of our shores to see that. Indeed, what distinguishes American philanthropy is the willingness of the average person to give of his or her own means. The institutions of philanthropy, on the whole, are reflections of that willingness.

If one looks at the American system, voluntarism was the way in which fire departments were developed. Libraries were early attempts to democratize literacy — funded by voluntary contributions. Hospitals were almost universally begun and supported by faith-based or ethnic-defined populations, not by taxes or insurance. Even education in general is still not perceived by many as essentially an obligation of the society [read “government”] — leading to massive personal debts for higher education and the controversial charter school movement for the El-Hi levels.

Therefore, while philanthropy infuses daily life, for most people it meant voyeuristic sightseeing of the lifestyles and largesse of the very rich and powerful. They distinguished it from their charitable giving at Church or rent parties or little tin charity boxes at the corner store.

Something changed and it is important to talk about those changes and their implications.

1. Unintentional to intentional. It is fair to state that philanthropic behavior, until this century, was the unintended consequence of public policy. To take only one example, the safety net of social security permitted funders to, implicitly, feel that there is no requirement that personal giving is the only place at-risk populations can turn. It meant that a funder might well choose to redirect his or her giving to other causes of more personal interest. Another example is the almost universal dependence of public schools on private funding for their arts or cultural activities or class trips. In other words, municipalities no longer feel the need to build in funding for these activities. Municipalities with wealthier parents and alumni are likely to provide more co-curricular opportunities than those in poorer areas.

That began to change incrementally during the time when taxes became a dirty word, but the intentionality became very overt during the Bush-Cheney presidency. For one example, after the disastrous and deadly Hurricane Katrina, the first response was not government mobilization but rather the mobilization of Bush Sr. and Bill Clinton to go raise private funds. The tragedy of that approach has been well documented, but it was also an important statement about that administration’s view about which sector had what responsibility.

Since then, the role of philanthropy has been a part of every policy and budget decision on the federal, state, regional and local level. It serves to give philanthropy too much power, and, ironically, far too much responsibility.

2. The democratization or, perhaps more accurately, the anarchization of philanthropy. One can be stopped on the street, sitting at dinner, opening the mail, watching late-night TV and sure enough we’ll be solicited. And because of how easy it is to start fundraising campaigns or to quickly put up websites, many people find it desirable to give directly.

Some of this is very welcome. Giving Tuesday has institutionalized online giving and has had a huge impact around the world. For those with shallow pockets, it can be very gratifying to support a classroom outing in the U.S. or a village seamstress in Africa rather than have those limited funds go through the purported bureaucracies of intermediaries. Of course, there are always scams, scandals and predators, so the disadvantages of anarchized philanthropy is the difficulty ensuring that one’s money is going where it is promised.

3. The concentration of wealth, the sheer size of some gifts, the growth of private/public funds under DAFs all have forced the issue of equitability and equity onto the table. There are issues of altruistic folks of privilege determining what is best or irrelevant for those who have less and also of the legitimacy of wealthy folks using their foundations and private giving to distort public policy. There has been a slew of recent book-length commentaries on this issue. Their attitudes range from the essential fallacy of a system that depends on voluntary giving to an attempt to rebalance what philanthropy can, legitimately, be expected to do. What is relevant to us at this time in history is not that there are authors exploring and challenging philanthropic behavior — rather that those commentaries are getting attention beyond our highly gilded sector and getting read widely.

4. The emergence of “philanthropy adjacent” approaches available to many. This emerges out of a convergence of some interrelated but separate trends.

a. One emerges from an underlying skepticism toward the NFP sector model’s ability to succeed. This approach argues that without a motivation for personal gain, the creativity and long-term commitment to make real change can never be sustained. Therefore, the real solution to long-term societal challenges is to develop alternative models where the owner or investor can “do well by doing good.”

b. A corollary of that is the recognition that most ngo/nfp organizations can never have access to the capital necessary to reach the scale to have the impact an “investor” would demand — that traditional “donors” might not. For-profit business, even when B-corps or ESG approved, have access to capital markets that the nfp/ngo sector doesn’t.

c. Foundation and other funders come at this from a somewhat different direction. Why, they ask, should only our philanthropic giving reflect our values? If we care about smoking or societal equity or the environment or food insecurity, we should find ways of aligning what we do with our investment money with the same underlying values that we apply to our giving. Impact investing and values screens are increasingly viewed as mainstream.

d. As many of the major investment firms offer some “values based” funds available through their retirement menu, the average investor now has options previously available only to those with deep bench investment advisors.

5. Systemic thinking has forced funders and policy makers to recognize the interconnectedness of so many elements of what must be fixed. A program grant to a local organization may be very useful but it is highly unlikely to get to the source of the problem. Government SNAP programming is by far the most efficient way to address food insecurity in the USA, but it cannot, alone, eliminate the continuing need. Voluntary clean up of a river will be satisfying but unless there are enforced policies about what is dumped into that river, edible fish are unlikely to return.

Globalism is another component of the systemic. Despite some misguided political voices these days, there is no such thing as a fully independent national economy and certainly no border protections from environmental degradation. Those in the philanthropy world who are committed to addressing the “systemic” need inevitably to address the “global.”

6. If philanthropy has moved into society’s zeitgeist, there is a danger that there will be two very problematic long-term responses:

a. That the visibility of foundations and other large giving will mislead people to think that private philanthropy can ever adequately replace public responsibility. Donated dollars are a mere percentage of what an adequate tax/public system should and can provide. In an anti-government era, this would be disastrous since having human services depend fully on voluntarism would condemn millions to hunger and illiteracy and more.

b. That the attention to private philanthropy will lead to severe restrictions on it. The “closing of civil society” seen in so many places around the world, including the USA, might limit all citizens from exercising advocacy and free speech rights we should still cherish.

Some have argued that we are living in the second Golden Age of Philanthropy. If one argues only from the perspective of UHNW giving, that is true. But in many ways, as the focus of philanthropy moves from aspirational voyeurism to more normal behavior and attention of the many, I would argue that such a characterization misses the point of how radically these changes are. I use the word zeitgeist to suggest that philanthropy is one of the defining topics of our era in ways never imagined before. JN

Richard Marker is the founder of the Institute for Wise Philanthropy (wisephilanthropy.com/about-us/richard-a-marker) which educates and advises funders around the world. He is also faculty co-director of the University of Pennsylvania Center for High Impact Philanthropy’s Funder Education program. This article originally appeared on ejewishphilanthropy.com.

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